1. Block Grant and Block Grant
Formulae for the Education Sector
Jean-Marc Lepain
Public Finance Specialist
Intergovernmental Fiscal Advisor
Ministry of Finance, Vientiane
jlepain@yahoo.fr

2. Part 1
General Principles

3. What is a block grant?
Definition:
A block grant is a non-discretionary budget
allocation to a specific school determined by
formula based on objective parameters such
as number of students, type of school, etc.

4. Why Introducing Block Grants?
• Fiscal equity: block grant is a mechanism that ensure equity in the
allocation of budget to schools, districts and provinces;
• Social equity: reduction and elimination of school fees, possible
modulation in relation to targeted population;
• Transparency: the block grant system combined with budget norms
and budget transfer formulae will ensure complete transparency in
the allocation of funds:
• Efficiency: more efficient use of funds reflecting local preferences
and needs;
• Flexibility: elimination of line item budgeting, direct linkage with
program budgeting,
• Improved government services: block grants ensure that schools
receive sufficient funding for operational expenditures such as
cleaning, maintenance, textbooks, pedagogic materials, etc.

5. Education Policy Objectives
• The ultimate goal is the elimination of formal
registration and instructional fees for primary and
lower secondary education offset by a phased and
incremental scheme of school block grants, school
operational budgets and school development plans.
• ESDF targets the gradual abolition of school
registration and instructional fees in Grades 1-5
nationwide from 2010 onwards and Grades 6-9 from
2012 onwards with a public information campaign
from 2010. (ESDF, p26)

6. Type of Block Grants
• Community Block Grant (not based on the number of
student)
• General Block Grant or School Block Grant
• Conditional / Development Block Grant targeting
poverty, vulnerable populations, minorities, etc.

7. Types of General Block Grant
• Block Grant for kindergarten
• Block Grant for primary schools
• Block Grant for secondary schools
• Block Grant for TVET, TEIs and higher
education institutions

8. School Block Grant
• Will ensure that the funding through the
Provincial Education Allocation (PEA) is
allocated to school on a fair and equitable
basis.
• Will be available for financing line-item
expenditures of chapter 12 and 16 plus line-
item 13.03.01.
• Will pave the way for the complete
relinquishment of user fees.

9. Expenditure Financed by Block Grant
Non-wage expenditures such as:
• Operating expenditure
• Procurement of textbooks
• School improvement toward effectiveness

10. Operating Expenditures
• Premises maintenance and cleaning
• Utilities (water, electricity)
• Learning material other than textbooks
• Stationary
• clothing for the students (pants for the boys and
pa sinh for the girls; shirt, shoes socks and hat
(conditioned on approval by district/provincial
authorities)
• Transportation

11. School Improvement toward
Effectiveness
The block grant may be used to fund the following school
improvement activities based on school planning for school
improvement and effectiveness:
• Income generating activities
• Extra-curricular activities
• Drop out interventions
• School uniforms
• School feeding
• Advocacy to increase school participation, etc.
• School readiness programs
• Skills improvement, e.g. on reading and comprehension,
etc.

12. School Plan
• The allocation of the block grant depend on the
submission by the school of a ‘School Plan’;
• School Directors are responsible for developing
the school plan in consultation with Village
Education Development Committees;
• Village Education Development Committees
should formally approve the School Plan;
• The School Plan must be kept as simple as
possible and use a template.

13. Content of the School Plan
The School Plan template must include the following information
grouped in sections:
• Physical parameters of the school: school type (rural/urban, etc.),
building type (building types should be limited to two or three)
availability of utilities, availability of latrines, number of classes,
other buildings;
• Number of grades, number of teachers, administrative staff,
maintenance staff, number of students by grade and by gender
• School indicators: repetition rate, dropping rate, gender ratio
• Budget of the school for non-wage expenditure
• Investment required if necessary (still under discussion)

14. Fiscal Envelope for School Block Grants
and calculation of the notional amounts
• The Fiscal Envelope available for each block grant type
will be determined through a reiterative consultative
process that will use both the national MTEF and the
sector MTEF.
• The size of the fiscal envelope will determine all
notional amounts used in the formulae such as ‘fix
amount per student’ or ‘minimum fix amount for small
village schools’.
• MoE, in consultation with MoF, is responsible for
calculating the notional amounts.
• Notional amounts should be included in the budget
submitted to the Parliament.

15. Objectives of Development Block
Grants
• Poverty Reduction: 47-poorest districts receive
school block grants as a priority. 70 poor districts
brought on stream through a phased,
incremental, time-bound and benchmarked
process. (ESDF, p26);
• Increasing school attendance through meals
provided to students and through student grants;
• Increasing attendance of young girls through
student grants

16. Block Grant Management and Capacity
Building Needs
• A general capacity building plan part of the Capacity Development
Framework, will have to be put in place, including selection of trainers and
training of trainers;
• The strategy includes strengthening central Ministry of Education strategic
management through well defined capacity development plan.
• Aligned to this is a strategy for improving the provincial and district-levels
of education management in line with national policies.
• With the introduction of school block grants revised budget formats and
procedures will be required which will eventually involve an enhanced role
for VEDCs. School numbers that reflect performance based on set
education priority targets.
• Seminars for schools directors and provincial authorities will have to be
organized nation-wide

17. Part 2
Pilot Project for Conditional
Block Grants

18. The World Bank EDP II Experience
• Block grant type: community block grant
• The fund facility provided 3M Kips per year per school in
400 villages in 19 districts and 6 provinces (Huaphan,
Phongsali, Odumxay, Luang Namtha, Xekong and Attapeu);
• Expenditure covered: learning material, blackboard,
stationary, school bags, school uniforms, food;
• The experiences and lessons learned in the implementation
of the Community Block Grant will be used in the
formulation of the guidelines in the implementation of the
School Block Grant under the Fast Track Initiatives to be
funded by WB, AusAID, UNICEF and the World Food
Program (WFP).

19. Education Development Grant
Program (EDGP) of the BESDP
• Targets lower secondary schools;
• Total funding for the EDGP amounts to USD144,800
which is targeted for distribution to 96 lower
secondary schools in rural areas of 13 poorer provinces
• Grant implementation started in SY 2009-2010 and will
end in 2012.
• Three types of expenditure are eligible:
(1)Procurement of consumable items for teaching and
learning, (2) Procurement of items for minor repairs
and maintenance, (3) Extra-curricular activities and
income-generating activities for the schools.

20. Part 3
Policy Issues

21. Distinguishing types of schools
The calculation of block grants might use different
parameters such as:
• Rural schools / urban schools
• Schools with/without electricity and water
• Building type (bamboo, concreate, thatch roof,
cimented /non-cimented floor (for cleaning needs)
• Size of the school (number of students)
• Presence of vulnerable populations
• Poverty Index
• Education Development Index

22. Grants integration
• Should school grants, development grants and student grants be fully
integrated?
• MoF see no reason for dissociating Operating Expenses Block Grant and
Block Grant for School Improvement towards Effectiveness as there are
significant overlap between the two, especially if we include textbooks
and teaching materials in the school block grant.
• For political reasons it appears better to use different formulae, or
variations on the same formulae to address different situation, rather than
different block grants;
• Concept notes prepared by MOF and the Education Sector Profile and
Need Assessment show that increasing operational budget in schools with
a low Education Development Index has brought no improvement.
Additional funding could be made available for new policies, if a pilot
phase demonstrate their effectiveness.

23. Measuring the Efficiency of Block
Grants
• School Plan must include indicators that allow

24. Centralization vs. Decentralization

25. Introduction Policy
• MoF proposes to have a phased introduction of school
block grants giving priority of primary schools
• Introduction of other block grants will depend on the
materialization of additional fiscal space as determined by
the National Medium Term Expenditure Framework and in
relation to the education sector MTEF when completed.
• The approach for reducing a school’s reliance on parental
contributions will be based on a MoE/MoF agreed phased,
incremental and time-bound model beginning with Lao
PDR’s 47-poorest districts.

26. Who to target for student grants?
• Students in poor districts (but how to verufy
how the student qualify?)
• Minorities
• Girls (but is it appropriate to distinguish
between students on a gender basis?)

27. Part 4
Choosing Grant Formulae

28. Formula 1
Two options:
(1) School ≤ 50 student Fix amount per school
(2) School ≥ 50 Student
G = grant
A = fix amount per school
S = fix amount per student
s = number of student above 50
Formula: G = A + (S x s)